Shareholders' Equity

Common Stock

The Company acquired and retired 180,000 shares of its common stock in the quarter ended October 3, 2015 at an average cost of $66.56 per share for a total of $12.0 million. The Company acquired and retired 500,000 shares of its common stock in the third quarter of 2014 at an average cost of $69.94 per share for a total of $35.0 million. The repurchases were under the 3.0 million share repurchase program approved by the Company's Board of Directors. There are approximately 2.3 million shares of our common stock available for repurchase under this program.

Share Based Compensation

The Company recognized approximately $13.3 million, $13.9 million and $11.9 million in share-based compensation expense in 2016, 2015 and 2014, respectively. The total income tax benefit recognized in the Consolidated Statements of Income for share-based compensation expense was $5.1 million, $5.3 million, and $4.5 million in 2016, 2015 and 2014, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award. The total fair value of shares and options vested was $11.3 million, $10.9 million, and $11.1 million in in 2016, 2015 and 2014, respectively. As of December 31, 2016, total unrecognized compensation cost related to share-based compensation awards was approximately $24.2 million, net of estimated forfeitures, which the Company expects to recognize over a weighted average period of approximately 2.0 years.

During 2014, the Company's shareholders approved the 2013 Equity Incentive Plan ("2013 Plan"). The 2013 Plan authorizes the issuance of 3.5 million shares of common stock for equity-based awards, and terminates any further grants under prior equity plans. Approximately 1.4 million shares were available for future grant or payment under the 2013 Plan at December 31, 2016.

Options and Stock Appreciation Rights

The Company uses several forms of share-based incentive awards, including non-qualified stock options, incentive stock options, and stock settled stock appreciation rights ("SARs"). Options and SARs generally vest over 5 years and expire 10 years from the grant date. All grants are made at prices equal to the fair market value of the stock on the grant date. The majority of the Company’s annual share-based incentive awards are made in the fiscal second quarter. For years ended December 31, 2016, January 2, 2016, and January 3, 2015, expired and canceled shares were immaterial.

The table below presents share-based compensation activity for the three fiscal years ended 2016, 2015 and 2014 (in millions):



	2016		2015		2014
Total Intrinsic Value of Share-Based Incentive Awards Exercised	$	2.5	$	4.3	$	5.2
Cash Received from Stock Option Exercises	0.5		4.1		1.9
Income Tax Benefit from the Exercise of Stock Options	—		1.6		2.0
Total Fair Value of Share-Based Incentive Awards Vested	4.9		4.9		5.5

The assumptions used in the Company's Black-Scholes valuation related to grants for options and SARs were as follows:



	2016			2015			2014
Per Share Weighted Average Fair Value of Grants	$	15.22		$	27.15		$	28.01
Risk-Free Interest Rate	1.4		%	1.9		%	2.0		%
Expected Life (Years)	7.0			7.0			7.0
Expected Volatility	29.6		%	35.6		%	37.7		%
Expected Dividend Yield	1.7		%	1.2		%	1.2		%

The average risk-free interest rate is based on US Treasury security rates in effect as of the grant date. The expected dividend yield is based on the projected annual dividend as a percentage of the estimated market value of the Company's common stock as of the grant date. The Company estimated the expected volatility using a weighted average of daily historical volatility of the Company's stock price over the expected term of the award. The Company estimated the expected term using historical data.

Following is a summary of share-based incentive plan activity (options and SARs) for fiscal 2016:



Number of Shares Under Options and SARs	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 2, 2016	1,548,266		$	63.09
Granted	293,400		57.43
Exercised	(137,475	)	45.60
Forfeited	(34,887	)	71.91
Expired	(58,805	)	68.56
Outstanding at December 31, 2016	1,610,499		$	63.16	5.8	$	12.9
Exercisable at December 31, 2016	952,766		$	60.77	4.0	9.2

Compensation expense recognized related to options and SARs was $4.2 million for fiscal 2016.

As of December 31, 2016, there was $9.8 million of unrecognized compensation cost related to non-vested options and SARs that is expected to be recognized as a charge to earnings over a weighted average period of 3.3 years.

The amount of options and SARs expected to vest is materially consistent with those outstanding and not yet exercisable.

Restricted Stock Awards and Restricted Stock Units

Restricted stock awards ("RSA") and restricted stock units ("RSU") consist of shares or the rights to shares of the Company's stock. The awards are restricted such that they are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer. As defined in the individual grant agreements, acceleration of vesting may occur under a change in control, or death, disability or normal retirement of the grantee. RSAs and RSUs are valued using the closing market price as of the grant date.

Following is a summary of RSA activity for fiscal 2016:



	Shares		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested RSAs at January 2, 2016	14,400		$	78.15	0.4
Granted	19,593		57.43
Vested	(14,400	)	78.15
Unvested RSAs December 31, 2016	19,593		$	57.43	0.4

The weighted average grant date fair value of awards granted was $57.43, $78.15 and $75.76 in 2016, 2015 and 2014, respectively.

RSAs vest on the first anniversary of the grant date, provided the holder of the shares is continuously employed by or in the service of the Company until the vesting date. Compensation expense recognized related to the RSAs was $1.1 million for fiscal 2016.

As of December 31, 2016, there was $0.4 million of unrecognized compensation cost related to non-vested RSAs that is expected to be recognized as a charge to earnings over a weighted average period of 0.4 years.

Following is a summary of RSU activity for fiscal 2016:



	Shares		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested RSUs at January 2, 2016	268,655		$	72.91	1.8
Granted	105,648		57.50
Vested	(81,085	)	65.23
Forfeited	(15,355	)	74.18
Unvested RSUs at December 31, 2016	277,863		$	69.23	1.7

The weighted average grant date fair value of awards granted was $57.50, $77.38 and $74.77 in 2016, 2015 and 2014, respectively.

RSUs vest on the third anniversary of the grant date, provided the holder of the shares is continuously employed by the Company until the vesting date. Compensation expense recognized related to the RSUs was $5.6 million for fiscal 2016.

As of December 31, 2016, there was $9.2 million of unrecognized compensation cost related to non-vested RSUs that is expected to be recognized as a charge to earnings over a weighted average period of 1.7 years.

Performance Share Units

Performance share unit ("PSU") awards consist of shares or the rights to shares of the Company's stock which are awarded to employees of the Company. These shares are payable upon the determination that the Company achieved certain established performance targets and can range from 0% to 200% of the targeted payout based on the actual results. PSUs have a performance period of 3 years. As set forth in the individual grant agreements, acceleration of vesting may occur under a change in control, death or disability. There are no voting rights with these instruments until vesting occurs and a share of stock is issued. Some of the PSU awards are valued using a Monte Carlo simulation method as of the grant date while others are valued using the closing market price as of the grant date depending on the performance criteria for the award.

Following is a summary of PSU activity for fiscal 2016:



	Shares		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested PSUs at January 2, 2016	87,895		$	75.81	1.9
Granted	83,605		51.84
Forfeited	(38,160	)	60.10
Unvested PSUs December 31, 2016	133,340		$	65.28	2.0

The weighted average grant date fair value of awards granted was $51.84, $89.98 and $83.74 in 2016, 2015 and 2014, respectively.

Compensation expense for awards granted are recognized based on the Monte Carlo simulation value or the expected payout ratio depending upon the performance criterion for the award, net of estimated forfeitures. Compensation expense recognized related to PSUs was $2.4 million for fiscal 2016 and $1.8 million for fiscal 2015. Total unrecognized compensation expense for all PSUs granted as of December 31, 2016 was $4.8 million and it is expected to be recognized as a charge to earnings over a weighted average period of 2.0 years.